ITR
Rent from a shop or office I own
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Facts
Rent from letting buildings, whether residential or commercial, is generally taxed as house property income. It becomes business income only where letting is your business in a real sense, or the property is used in your own business. Most individual landlords show it under house property.
Provisions and law
- Sec 22 (now Sec 20)Annual value of property you own is taxed under house property
- Sec 24(a) (now Sec 22(1)(a))Standard deduction of 30% of the net annual value
Analysis
A shop let out at ₹50,000 a month gives ₹6,00,000 of rent, reduced by municipal tax and 30% under Sec 24(a) (now Sec 22(1)(a)). Business tenants deduct TDS under Sec 194I, which you claim. If the property is used for your own business, there is no rent income and the property is treated in your business accounts instead. Charges for services like security may need separate treatment.
Conclusion
- Confirm the property is let out, not used in your business.
- Compute rent less tax and 30%.
- Claim TDS deducted by tenants.
- Report each property in Schedule HP.
A Savvy can do this for you
Return with rent from two or more properties and home loan interest, Sec 24(b)
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